Q1 2026 Enphase Energy Inc Earnings Call

April 28, 2026

Operator: Good day, and welcome to Enphase Energy's Q1 2026 financial results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Zach Freedman. Please go ahead.

Zach Freedman: Good afternoon, thank you for joining us on today's Conference Call to discuss Enphase Energy's Q1 2026 results. On today's call are Badri Kothandaraman, our President and Chief Executive Officer, Mandy Yang, our Chief Financial Officer, and Raghu Belur, our Chief Products Officer. After the market closed today, Enphase issued a press release announcing the results for its Q1 ended 31 March 2026. During the conference call, Enphase management will be making forward-looking statements including but not limited to statements related to our expected future financial performance, market trends, the capabilities of our technology and products, and the benefits to homeowners and installers, our operations, including manufacturing, customer service, and supply and demand, anticipated growth in existing and new markets, including the TPO market. The timing of new product introductions and enhancements to existing products and regulatory tax, tariff, and supply chain matters.

Zachary Freedman: Good afternoon, thank you for joining us on today's Conference Call to discuss Enphase Energy's Q1 2026 results. On today's call are Badri Kothandaraman, our President and Chief Executive Officer, Mandy Yang, our Chief Financial Officer, and Raghu Belur, our Chief Products Officer. After the market closed today, Enphase issued a press release announcing the results for its Q1 ended 31 March 2026. During the conference call, Enphase management will be making forward-looking statements including but not limited to statements related to our expected future financial performance, market trends, the capabilities of our technology and products, and the benefits to homeowners and installers, our operations, including manufacturing, customer service, and supply and demand, anticipated growth in existing and new markets, including the TPO market. The timing of new product introductions and enhancements to existing products and regulatory tax, tariff, and supply chain matters.

Zach Freedman: These forward-looking statements involve significant risks and uncertainties, and our actual results and the timing of events could differ materially from these expectations. For more complete discussion of the risks and uncertainties, please see our most recent Form 10-K and 10-Qs filed with the SEC. We caution you not to place any undue reliance on forward-looking statements and undertake no duty or obligation to update any forward-looking statements as a result of new information, future events or changes in expectations. Also, please note that financial measures used on this call are expressed on a non-GAAP basis, unless otherwise noted, and have been adjusted to exclude certain charges. We have provided a reconciliation of these non-GAAP financial measures to GAAP financial measures in our earnings release furnished with the SEC on Form 8-K, which can also be found in the investor relations section of our website.

Zachary Freedman: These forward-looking statements involve significant risks and uncertainties, and our actual results and the timing of events could differ materially from these expectations. For more complete discussion of the risks and uncertainties, please see our most recent Form 10-K and 10-Qs filed with the SEC. We caution you not to place any undue reliance on forward-looking statements and undertake no duty or obligation to update any forward-looking statements as a result of new information, future events or changes in expectations. Also, please note that financial measures used on this call are expressed on a non-GAAP basis, unless otherwise noted, and have been adjusted to exclude certain charges. We have provided a reconciliation of these non-GAAP financial measures to GAAP financial measures in our earnings release furnished with the SEC on Form 8-K, which can also be found in the investor relations section of our website.

Zach Freedman: Now I'd like to introduce Badri Kothandaraman, our President and Chief Executive Officer. Badri.

Zachary Freedman: Now I'd like to introduce Badri Kothandaraman, our President and Chief Executive Officer. Badri.

Badri Kothandaraman: Good afternoon, thanks for joining us today to discuss our Q1 2026 financial results. We reported quarterly revenue of $282.9 million, shipped 1.41 million microinverters and 103 MWh of batteries, and generated free cash flow of $83 million. Q1 revenue included thirty-four and a half million dollars of safe harbor revenue. We exited the quarter with channel inventory above normal levels for both microinverters and batteries. On a non-GAAP basis, we delivered gross margin of 44%, operating expenses of 27% and operating income of 17%, all as a percentage of revenue. Gross margin was above the midpoint of our guidance range. Mandy will cover the financials in more detail later in the call.

Badri Kothandaraman: Our customer service NPS, Net Promoter Score, was 82% in Q1, a record for Enphase, compared to 79% in Q4. We are laser-focused on customer experience for the last few years, and our average call wait time in Q1 was approximately 1.4 minutes. We have also begun a soft rollout of our Enphase AI Assistant in the homeowner app to approximately 100,000 homeowners, and we expect this to expand over time. The AI Assistant is trained on Enphase product knowledge, historical service cases, and relevant customer support data with access to Salesforce information to help answer system-specific questions more accurately. It also supports multiple languages, helping homeowners get faster, more intuitive help wherever they are. We expect to pilot a similar AI Assistant for installers during this quarter to help them do fleet management in a much more efficient manner.

Badri Kothandaraman: Let's cover operations. In Q1, we shipped approximately 1.39 million microinverters from our Texas and South Carolina manufacturing facilities and booked the associated 45X Production Tax Credits. These US-made microinverters help residential lease and PPA providers, as well as commercial asset owners, qualify for the 100%. Yeah, qualify for the 10% domestic content ITC added. We shipped 49.5 MWh of IQ Batteries from our Texas manufacturing facility in Q1. We offer IQ Batteries that meet domestic content and FIOC requirements, helping leased PPA customers qualify for ITC bonuses. Let's cover the regions. Our US and international revenue mix in Q1 was 83% and 17% respectively. In the US, our revenue declined 23% sequentially, primarily due to lower residential, solar, and battery demand following the expiration of 25D tax credits and typical seasonality.

Our us and International Revenue. Mix and q1 was 83% and 17% respectively. In the US, our Revenue declined, 23% sequentially.

Badri Kothandaraman: Safe harbor revenue increased to $34.5 million in Q1 compared to $20.3 million in Q4. Our overall sell-through declined 48% sequentially, as Q4 was elevated by significant demand pull forward ahead of the tax credit expiration. On a year-over-year basis, which better reflects the underlying impact of the policy change, Q1 2026 sell-through declined 18% compared to Q1 2025. Our US commercial microinverter sales more than doubled in Q1 as compared to Q4, driven by positive market reception for IQ9 microinverters. We now serve both major US three-phase commercial grid types, the 480V as well as 208V. In Q3, we expect to begin shipping our high-power 548W IQ9S microinverter for 480V three-phase systems, which can support solar panels up to 770W DC.

Badri Kothandaraman: We also expect to see near-term safe harbor demand from customers placing orders between now and early July. With US manufacturing, domestic content eligibility, and FIOC compliant products, we believe our commercial business is well-positioned for continued growth. In Europe, our revenue increased 36% in Q1 compared to Q4, primarily because sell-in levels rose towards sell-through levels after we undershipped the European channel in Q4. We are beginning to see green shoots in April with solar and battery activations up healthy double digits across multiple European markets compared with the monthly averages in Q1. This is being driven by rising power prices and increasing battery adoption. Europe is increasingly becoming a battery-critical market. As self-consumption, dynamic tariffs, and VPP become more important, the company that wins the battery relationship is well-positioned to win the broader home energy system over time, including solar, software, and VPP.

This is being driven by Rising power prices and increasing battery adoption.

Badri Kothandaraman: In the Netherlands, our battery activations in April increased by approximately 75% compared to the monthly run rate in Q1, as rising export penalties and the planned phase-out of net metering by the end of 2026 strengthen the case for self-consumption. In France, the reduction of feed-in tariff is also shifting the market towards self-consumption and increasing the interest in batteries, especially for new solar installations. Our battery activations in France increased approximately 20% in April from the monthly run rate in Q1. A more modest but positive trend. In Germany, our battery activations rose approximately 27% in April compared to Q1's monthly average. We have approximately 475,000 Enphase residential solar system in Netherlands and approximately 400,000 in France, creating a meaningful retrofit opportunity in both markets.

As self consumption, Dynamic tariffs and VPP become more important. The company that wins the battery relationship is well positioned to win the broader home Energy System over time including solar software and VPP in the Netherlands. Our battery activations in April increased by approximately 75% compared to the monthly run rate in q1 as rising export penalties and the Planned face out of next metering by the end of 2026.

Strengthen the case for self consumption.

In France, the reduction of feed-in tariffs.

Also shifting the market towards self-consumption and increasing the interest in batteries, especially for new solar installations.

Our battery activations in France, increased approximately 20% in April.

From the monthly run rate in Q1, a more modest but positive trend.

In Germany, our battery activations rose approximately 27% in April compared to Q1's monthly average.

Badri Kothandaraman: We are increasing homeowner events, doing direct marketing to consumers, and working with the retail energy providers, along with strong support by our technologies, such as PowerMatch technology and our upcoming fifth-generation battery. We have also built strong inside sales teams and a lead management platform across France and Netherlands in the last three months. We are hoping to convert this demand into revenue with a much higher throughput. Competition remains intense across Europe, particularly from low-cost string inverter and battery providers. In response, we are reducing our distributor list prices for batteries by approximately 10% in May, which follows a 20% reduction for microinverters already implemented from December 2023. In addition to this sharper pricing, we are instituting a stronger homeowner demand engine and a more competitive product roadmap, which includes IQ9 and our fifth-generation battery, which is coming very soon.

We have approximately 475,000 in Phase, residential solar system in Netherlands, and approximately 400,000 in France, creating a meaningful retrofit opportunity in both markets.

We are increasing homeowner events.

Doing direct marketing to Consumers.

And working with the Retail Energy providers.

Along with strong support by our Technologies, such as power match technology.

And our upcoming fifth generation battery.

We have also built strong inside sales teams, and the lead management platform across France and Netherlands in the last 3 months.

And we are hoping to convert this demand into Revenue with a much higher throughput.

Competition remains intense across Europe, particularly from low-cost ring inverter and Battery providers.

In response, we are reducing our distributor list and prices for batteries by approximately 10% in May.

Badri Kothandaraman: Together, these actions improve our competitiveness today and position us for stronger growth as Europe shifts towards self-consumption, VPP, and flexible storage. In Australia, we are bullish on the battery opportunity. Australia is one of the world's most mature rooftop solar markets, with more than 4 million rooftop solar systems installed, which is roughly 1 in every 3 homes is already using solar. Battery adoption is now accelerating, supported by the federal Cheaper Home Batteries program, which provides an upfront discount for eligible small-scale batteries connected to new or existing rooftop solar. The program is evolving on 1 May to better support right-sized systems and reduce incentives for oversized batteries. We believe this plays directly to our advantages, including our upcoming fifth-generation battery, which has a stackable and scalable architecture that gives homeowners flexible capacity and the ability to add more over time.

Which follows a 20% reduction for micro inverters already implemented from December last year. In addition to this sharper pricing, we are instituting a stronger, homeowner demand engine and a more competitive product road map, which includes iq9 and our fifth generation battery which is coming very soon.

Together, these actions improve our competitiveness today and position us for stronger growth, as Europe shifts towards self-consumption, VPP, and flexible storage.

In Australia, we are bullish on the battery opportunity. Australia is 1 of the world's most mature, rooftop solar markets, with more than 4 million rooftop solar systems installed, which is roughly,

Using solar.

Battery adoption is now accelerating, supported by the federal Cheaper Home Batteries Program.

Which provides an upfront discount for eligible, small-scale batteries connected to new or existing rooftop solar. The program is evolving on May 1st to better support right-sized systems and reduce incentives for oversized batteries. We believe this plays directly

To our advantage is including our upcoming, fifth generation battery.

Badri Kothandaraman: Let's now discuss our Q2 outlook. On the last earnings call, we said we expected Q2 revenue to be higher than Q1, driven in part by strong Safe Harbor demand. In line with those comments, our Q2 revenue guidance is $280 million to $310 million, including approximately $85 million of Safe Harbor revenue. Since we exited the channel with a high inventory in Q1, we are under shipping approximately $25 million compared to the real demand. At this point, we are approximately 85% booked to the midpoint of our guidance. We expect modest underlying sell-through growth in Q2 as compared to Q1. That said, our Q1 sell-through results and Q2 sell-through expectations are roughly 10% to 15% below our prior view. A weaker start to the year, primarily due to unfavorable weather conditions and TPO financing challenges.

Which has a stackable and scalable architecture that gives homeowners flexible capacity and the ability to add more over time.

Let's now discuss our Q2 Outlook.

On the last earnings call. We said, we expected Q2 Revenue to be higher than q1 driven in part by strong safe, horrible demand.

In line with those comments, our Q2 revenue guidance is

280 million to 310 million, including approximately, 85 million of Safe, Harbor Revenue.

Since we exited the channel with a high inventory in Q1,

We are under-shipping approximately 25 million compared to the real demand.

At this point, we are approximately 85% booked to the midpoint of our guidance.

We expect modest underlying self through growth in Q2 as compared to q1.

That's it. Our Q1 sell-through results.

Badri Kothandaraman: We expect to offset some of this pressure in H2 of this year through prepaid lease adoption, which I'll talk about soon, US commercial growth, and potential international recovery. For batteries, our guidance is 100 to 110 MWh. We recently lowered our battery list prices to distributors in the US by approximately 12% to 14% in March, supported by the recently reduced reciprocal tariff rates. Combined with our pricing changes in Europe, we expect higher battery sales volumes in H2 of this year. Just to repeat, our Q2 revenue guidance anticipates us under shipping end market demand by $25 million in order to correct for Q1's over-shipment. Let's talk about safe harbor. We have executed new agreements year-to-date with third-party owners for approximately $843.6 million of product.

And Q2 sell-through expectations are roughly 10% to 15% below our prior view—a weaker start to the year, primarily due to unfavorable weather conditions and TPO financing challenges.

We expect to offset some of this pressure in the second half of this year.

Through prepaid leads adoption, which I'll talk about soon. Us commercial growth and potential International recovery.

For Batteries. Our guidance is 100 to 110 megawatt hours.

We recently lowered our battery list prices to distributors in the US by approximately 12 to 14% in March supported by the recently, reduced reciprocal tariff rates.

Combined with our pricing changes in Europe, we expect higher battery sales volumes in the second half of this year.

And just to repeat.

Our Q2 Revenue guidance.

Anticipates us under shipping and market demand by 25 million in order to correct for few months over shipment.

Let's talk about Safe Harbor.

Badri Kothandaraman: 89.6 million under the ITC 5% safe harbor method and $754 million under the physical work test method. This is in addition to the $67.7 million physical work test orders secured in Q4. These microinverter orders create two important benefits for Enphase. First, they secure significant multiyear volume for our microinverter business. Second, they position us very well for future battery attached sales from 2027 to 2030 when these systems are expected to be installed. This also underscores our strength with the TPO providers. Moving to financing. Prepaid lease adoption continues to build momentum. Prepaid leases give homeowners a lower upfront cost today and the option to own the system after 5 years.

We have executed new agreements year to date with third-party owners for approximately $843.6 million of product.

89.6 million under the ITC 5% Safe, Harbor method, and 754 million under the physical work, test method.

This is, in addition to the 67.7 million physical work, test orders, secured in Q4.

These micro inverter orders.

Create 2, important benefits for NC.

First.

They secure significant multi-year volume for a micro inverter business.

And second, they position us very well for future battery-attached sales from 2027 to 2030, when these systems are expected to be installed.

This also underscores our strength with the TPO providers.

Moving to financing 3 paid. Lise adoption continues to build momentum.

Badri Kothandaraman: The TPO initially owns the system, claims the 48E tax credit, and shares that value with the homeowner through a prepaid lease or low monthly payments when paired with a loan. This lowers the homeowner's effective cost and helps restore the economics closer to the 30% 25D tax credit era. We continue to support Propel, a TPO-led prepaid lease program that exclusively uses Enphase equipment and is being field-tested with our loan and distribution partners. The pilot is designed to service the long tail of installers and has expanded from 40 installers at the time of our February earnings call to more than 200 installers today across 4 states. We are now seeing a run rate of approximately 200 net originations per week and are encouraged by early customer adoption trends.

Prepaid leases give homeowners a lower upfront cost today and the option to own the system after 5 years.

the TPO initially owns the system claims the 4080 tax credit and shares that value with the homeowner through a prepaid lease or low monthly payments when paired with the loan,

This lowers the homeowner's effective cost and helps restore the economics closer to the 30% 25d tax credit era.

With our loan and distribution partners.

The pilot.

Is designed to service the long tail of installers and has expanded from 40 installers at the time of our February earnings call to more than 200 installers today across 4 States.

We are now seeing a run rate of approximately 200, net originations for week.

Badri Kothandaraman: It must be noted that the battery attached to those originations is approximately 84%. That's not very surprising because one of the states Propel is now being piloted is in California. We expect to complete the pilots this quarter and expand the program more broadly beginning in July after validating customer experience, installer execution, which is happening now, and financing performance at scale. Let's talk about products starting with IQ Batteries. Our fourth generation IQ Battery 10C delivers a smaller footprint, higher energy density, and simpler installation with the IQ Meter Collar. The Meter Collar is now approved by 64 US utilities and growing, covering approximately 34 million customer accounts. In California, the Meter Collar is approved by all 3 major investor-owned utilities and the largest customer-owned utility. We believe this gives Enphase the broadest utility approval footprint of any major battery provider today.

And are encouraged by early customer adoption trends.

It must be noted that

The battery attached to those originations is approximately 84%. That's not very surprising because one of the states Propel is now being piloted in is California.

We expect to complete the pilots this quarter and expand the program more broadly beginning in July, after validating customer experience. Installer execution, which is happening now, and financing performance at scale.

Let's talk about products, starting with the IQ batteries. Our fourth generation IQ battery tendency delivers a smaller footprint, higher energy, density and simpler installation with the IQ meter collar.

The meter color is now approved by 64 us utilities.

And growing, covering approximately 34 million customer accounts.

In California, the caller is approved by all three major investor-owned utilities and the largest customer-owned utility.

Badri Kothandaraman: Our fifth-generation AC-coupled battery is built from stackable 5 kWh modular blocks that can scale up to 30 kWh. This battery uses 100 ampere-hour prismatic cells and targets roughly 50% higher energy density than the fourth-generation battery at about 40% lower cost. Paired with our PowerMatch software, we believe it will deliver a compelling combination of performance, flexibility, and value for installers and homeowners. We expect to begin pilots in Q3 and begin shipping in Q4. We are also making strong progress on IQ Vault 80, our commercial battery. The first product here is an 80 kWh AC-coupled commercial battery designed for small and medium commercial markets in the US. Our internal estimates indicate that this small commercial market represents an annual opportunity of approximately 1 GWh.

We believe this gives Enphase the broadest utility approval for print of any major battery provided today.

Our fifth generation is coupled back. Battery is built from stackable. 5 kilowatt hour. Modular blocks that can scale up to 30 kilowatt hours.

This battery uses.

100 amp hour Prismatic cell.

And targets, roughly 50% higher energy density than the fourth generation battery at about 40% lower cost.

Paired with our power match software. We believe it will deliver a compelling combination of performance. Flexibility and value for installers. And homeowners we expect to begin pilots in Q3

And they can ship in Q4.

We are also making strong progress on IQ Bolt, our commercial battery.

The first product here is an 80 kilowatt-hour.

AC coupled commercial battery.

Designed for small and medium commercial markets in the U.S.

Our internal estimates indicate that this small commercial market.

Badri Kothandaraman: The IQ Vault uses 314 Ah prismatic cells in a compact building block architecture and will be even more cost-effective. It can scale up by stringing up to 25 units together for approximately 2 MWh of capacity. The platform is designed to support backup, self-consumption, peak shaving, time of use optimization, as well as VPP participation, all managed through Enphase software. We believe IQ Vault brings our distributed architecture, our electronics expertise, and system-level intelligence into commercial storage, giving customers the flexible, high-quality platform for resilience and cost savings. We expect to begin pilots in Q1 2027. Turning to microinverters, we began shipping our IQ9 three-phase commercial microinverter in December, built on our GaN architecture.

Represents an annual opportunity of approximately 1 gigawatt hour.

The IQ board uses 314 amp hour. Prismatic cells, in a compact building block architecture and will be even more cost effective. It can scale up by stringing up to 25 units together.

For approximately 2 megawatt-hours of capacity.

The platform is designed to support backup self consumption Peak shaving time of use optimization as well as VPP. Participation all managed through inface software, We Believe IQ what brings our distributed? Architecture, our Electronics expertise and system level intelligence into commercial storage, giving customers the flexible high quality platform for resilience and cost savings. We expect to begin pilots in q127

Badri Kothandaraman: IQ9 opens up the 480 three-phase US commercial segment for Enphase for the first time, representing a new TAM of approximately $400 million annually. The installer feedback has been strong, with customers valuing Enphase quality for panel monitoring, simpler system design, lower installations, cost and balance of system cost, and higher system efficiency. We expect to introduce the higher power IQ9S-3P product in Q3, supporting 548 watts of AC power and pairing with solar panels up to 770 watts DC. We also expect to introduce IQ9 for global residential markets this quarter. Moving on to EV charging. We are making excellent progress on our IQ Bidirectional EV Charger, which is built on our 650 volts GaN power platform and engineered to work with modern 800 volt DC EV architectures.

Turning to micro inverters. We began shipping our iq9 3-phase commercial micro inverter in December built on our Gan architecture.

IQ9 opens up the 480-volt, 3-phase US commercial segment for Enphase, for the first time, representing a new TAM of approximately $400 million annually.

The installer feedback has been strong, with customers valuing in-phase quality per panel. Monitoring is simpler, system design is lower, installation costs and balance of system cost are lower, and system efficiency is higher. We expect to introduce the higher power IQ9 S3 phase product in Q3, supporting 548 watts of AC power and pairing with solar panels up to 770 watts DC.

We also expect to introduce iq9 for Global residential markets.

This quarter.

Badri Kothandaraman: This is a clear example of our ability to move power efficiently and bidirectionally between grid-phasing AC and high voltage DC systems with tight control and protection. The product is especially compelling because it simply pairs with the meter collar in the US or a backup switch in Europe, enabling streamlined home backup and VPP participation. We are in advanced discussion with multiple auto OEMs, including two partnership opportunities that are progressing well. We will share more as these discussions mature. We are targeting initial availability in Q4, starting with limited deployments as we complete the certifications, utility coordination, and vehicle compatibility validation. Finally, we are excited to announce today the development of our IQ solid-state transformer product for AI data centers. AI is driving rack power from roughly 150 kW to more than 1 MW.

Volts, Gan, Power Platform, and engineered to work with modern 800, volt DC EV architectures. This is a clear example of our ability to move.

Power efficiently.

And by directionally between grid facing AC and high voltage DC Systems with tight control and protection. The product is especially compelling because it simply pairs with the meter collar in the US or a backup switch in Europe.

Enabling streamlined, home, backup and VPP participation. We are in advanced discussion with multiple Auto oems, including 2.

Partnership opportunities that are progressing. Well, we will share more as these discussions mature. We we are targeting initial availability in Q4

Starting with limited deployments, as we complete the certifications, utility coordination, and vehicle compatibility validation.

so finally, we are excited to announce today, the development of our IQ solid state Transformer product, for AI data centers,

Badri Kothandaraman: The industry is moving towards higher voltage DC architectures, including 800 volt DC, as outlined in NVIDIA's white paper last September. We estimate the initial annual US addressable opportunity for IQ SST in AI data centers to exceed 11 GW by 2031, creating a significant new market for high efficiency, medium voltage power conversion. The IQ SST product is designed to convert medium voltage AC directly to low voltage DC in a single stage, creating the potential to eliminate site power batteries and rack-level backup while improving efficiency, reducing cost and complexity. IQ SST will be built as a distributed modular architecture. It is expected to deliver approximately 1.25 MW through a super cluster of 342 power modules with 800 volt DC output for next generation AI racks.

AI is driving rack power from roughly 150, kilowatts to more than a megawatt.

The industry is moving towards higher voltage DC architectures, including 800-volt DC, as outlined in Nvidia's white paper last September. We estimate the initial annual U.S. addressable opportunity for IQ SSD in AI data centers to exceed 11 gigawatts by 2031, creating a significant new market for high-efficiency, medium-voltage power conversion.

The IQ SSD product is designed to convert medium voltage. AC directly to low voltage, DC in a single stage, creating the potential to eliminate sidecar batteries and rack level backup while improving efficiency reducing cost and complexity.

Badri Kothandaraman: At the core of each power module will be a custom silicon Kestrel ASIC and a high frequency GaN-based power platform, which enables precise control, high efficiency, and fast response of the order of 1 to 3 ms. This fast response will enable advanced grid functions, improved handling of load and grid transients, and support centralized energy storage at the facility level. IQ SST is designed for reliability and serviceability. It is modular, includes built-in redundancy, and supports hot swapping without shutdown. It is also expected to deliver cost and supply chain advantages through fewer components, standard high volume parts, automated manufacturing, and US-based production. Our SST platform will be able to scale from a single 1.25 MW rack to multi-MW systems, supporting multiple grid voltages and extends beyond data centers into other adjacent high power markets as well.

IQ SST will be built as a distributed modular architecture. It is expected to deliver approximately 1.25 megawatts through a supercluster of 342 power modules with 800 volt DC output for Next Generation, AI racks,

Of each power module, will be your Custom Custom Custom silicon sestra lasic and a high frequency. Gan-based about the Power Platform which enables precise control, high efficiency and Fast Response of the order of 1 to 3 milliseconds.

This fast response will enable Advanced grid functions, improved handling of load and grid, transients, and support centralized energy storage at the facility level.

IQ SST is designed for reliability and serviceability. It is modular includes built-in redundancy and support hot swapping without shutdown. It is also expected to deliver cost and supply chain advantages through fewer components.

Standard high volume Parts automated manufacturing and us-based production.

Badri Kothandaraman: We are now engaged with more than 20 prospective customers and are expanding our partner ecosystem. We have completed product feasibility, built working power modules, and converged on the system design. In Q1, we restructured the company to fund SST within our existing operating framework and create room for the strategic programs. More than 80 engineers are now working on SST across power electronics, ASICs, software, mechanical design, manufacturing, and reliability. As we continue to drive productivity with AI across the company, we are targeting to fund the SST program within our current operating expense structure. We expect a full system demo later this year, pilots with customers in 2027, and volume shipments in 2028. We also expect revenue to build over time, but the strategic logic is clear.

Our SST platform will be able to scale from a single 1.25 megawatt rack to multi megawatt systems supporting multiple grid, voltages, and extends, Beyond data centers into other adjacent high, power markets as well.

We are now engaged with more than 20 prospective customers and are expanding our partner ecosystem. We have completed product feasibility.

Built working power modules and converged on the system design in Q1. We restructured the company to fund SST within our existing operating framework and create room for this strategic program.

More than 80 engineers are now working on SST, across power electronics, A6 software, mechanical design, manufacturing, and reliability. As we continue to drive productivity with AI across the company, we are targeting to fund the SSD program within our current operating expense structure.

We expect a full system demo later this year.

Pilots with customers in 2027 and volume shipments in 2028.

Badri Kothandaraman: IQ SST is a direct extension of our core strength in distributed power electronics, custom silicon, software-defined control, and high volume US manufacturing. We believe this architecture is the right way to power the next gen of AI infrastructure and are positioning Enphase to lead in this transition. Let me conclude. The market is going through a transition, especially in the US residential solar. We are focused on what we can control: execution, cost, innovation, financing solutions, and customer experience. We are seeing early traction in several important areas. Prepaid leases are gaining momentum in the US. Europe is beginning to show signs of recovery, with batteries becoming increasingly critical to the customer decision. In the US, commercial solar is starting to ramp, supported by IQ9 microinverters and our domestic manufacturing position. Our roadmap is also strengthening.

We also expect revenue to build over time, but the strategic logic is clear. IQ SST is a direct extension of our core strength in distributed power electronics.

Custom silicon.

In this transition.

Let me conclude the market is going through a transition especially in the US residential solar, but we are focused on what we can control execution, cost Innovation, financing Solutions and customer experience.

We are seeing early traction. Several important areas. Prepaid leases are gaining momentum in the US.

Europe is beginning to show signs of recovery, with batteries becoming increasingly critical to the customer decision in the US. Commercial solar is starting to ramp.

Supported by IQ9 microinverters and our domestic manufacturing position.

Badri Kothandaraman: Our fifth-generation battery, bidirectional EV charger, our IQ Vault commercial battery, and the IQ9 family of microinverters all expand what Enphase can deliver to homeowners, installers, and commercial customers. These products strengthen the core and open new growth opportunities. Finally, we believe IQ SST can give Enphase access to significantly larger end markets. It is a natural extension of what we have built over the last 20 years. Reliable power electronics, semiconductor innovation, software intelligence, and distributed system design. We believe Enphase is well-positioned for the next phase of growth. With that, I will turn the call over to Mandy for her review of our financial results. Mandy?

Our road map is also strengthening our fifth generation battery by directional EV charger. Our IQ Vault commercial battery and the iq9 family of micro inverters all expand. What in Phase can deliver to homeowners installers and Commercial customers. These products strengthen the core and open new growth opportunities.

Finally, We Believe IQ SSD can give Enphase access to significantly larger, end markets, it is a natural extension of what we have built over the last 20 years. Reliable, Power Electronics, semiconductor Innovation, software intelligence, and distributed system design. We believe in phases. Well, positioned for the next phase of growth with that, I will turn the call over to Mandy for her review of our financial

Mandy Yang: Thanks, Badri, and good afternoon, everyone. I will provide more details related to our Q1 of 2026 financial results, as well as our business outlook for the Q2 of 2026. We have provided reconciliations of this non-GAAP to GAAP financial measures in our earnings release posted today, which can also be found in the IR section of our website. Total revenue for Q1 was $282.9 million. We ship approximately 627.6MW DC of microinverters and 103.1MWh of IQ Batteries in the quarter. Q1 revenue included $34.5 million of safe harbor revenue. As a reminder, we define safe harbor revenue as any sales made to customers who plan to install the inventory over more than a year.

Results. Mandy

Thanks, Audrey and good afternoon, everyone. I will provide more details related to our first quarter of 2026 Financial results, as well as our business outlook, for the second quarter of 2026, we have provided reconciliations of this, non-gaap to gaap financial measures in our earnings, release posted today, which can also be found in the IR section of website.

Total revenue for Q1 was $282.9 million. We shipped approximately 627.6 megawatt DC of microinverters and 103.1 megawatt hours of active batteries in the quarter.

Q1 Revenue included, 34.5 million dollars of Safe. Harbor Revenue.

Mandy Yang: Non-GAAP gross margin was 43.9% in Q1 compared to 46.1% in Q4. GAAP gross margin was 35.5% in Q1 compared to 44.3% in Q4. GAAP gross margin was negatively impacted by 6.7 percentage points from the sale of our 2025 PTCs, which totaled $235 million and were sold at 93% of face value. This resulted in a discount of approximately $16.5 million, plus approximately $2.5 million of transaction-related fees. Reciprocal tariffs also impacted our gross margin by 4.3 percentage points in Q1. Non-GAAP operating expenses were $77 million for Q1 compared to $78.8 million for Q4.

The reminder, we Define Safe Harbor Revenue as any sales made to customers who plan to install the inventory over more than a year.

Long gave gross margin was 43.9% in Q1 compared to 46.1% in Q4. GAAP gross margin was 35.5% in Q1 compared to 44.3% in Q4. GAAP gross margin was negatively impacted by 6.7 percentage points from the sale of our 2025 PDCs, which totaled $235 million and were sold at 93% of face value.

This resulted in a discount of approximately $16.5 million, plus approximately $2.5 million of transaction-related fees,

reciprocal tariffs. Also impacted our gross margin by 4.3 percentage points into 1.

Mandy Yang: GAAP operating expenses were $130 million for Q1 compared to $129.6 million for Q4. GAAP operating expenses for Q1 included $45.4 million of stock-based compensation expenses, $3.8 million of acquisition-related expenses and amortization, and $3.8 million of restructuring and asset impairment charges. On a non-GAAP basis, income from operations for Q1 was $47.3 million compared to $79.4 million for Q4. On a GAAP basis, loss from operations was $29.6 million for Q1 compared to income from operations of $22.4 million for Q4. On a non-GAAP basis, net income for Q1 was $62.3 million compared to $93.4 million for Q4.

NG operating expenses worth 77 million for q1. Compared to 7 8. 8 4

Evaporating expenses were 130 million for q1. Compared to 129.6 million. For Q4, the evaporating expenses for q1 included 45.4 million dollars of stock based compensation expenses, 3.8 million of acquisition related, expenses and advertising and 3.8 million dollars of restructuring and AC impairment charges.

On the N basis income from operations for 21, was the 47.3 million compared to 79.4 million for Q4. I'm going to get basis. Lost from operations. Was 29.6 Million for q1. Compared to income from operations of 22.4 million for Q4.

Mandy Yang: This resulted in non-GAAP diluted earnings per share of $0.47 for Q1 compared to $0.71 for Q4. GAAP net loss for Q1 was $7.4 million compared to GAAP net income of $38.7 million for Q4. This resulted in GAAP diluted loss per share of $0.06 for Q1 compared to earnings per share of $0.29 for Q4. We exited Q1 with a total cash equivalents, and marketable securities balance of $930.6 million compared to $1.51 billion at the end of Q4. The five-year convertible notes we raised in 2021 were due on 1 March 2026, and we settled all the outstanding principal amount of $632.5 million with our cash on hand.

62.3 million compared to 93.44.

7.4 million compared to the main income of $38.7 million for Q4.

This resulted in gap diluted loss per share of 6 cents for q1 compared to earnings per share of 29 cents for Q4.

Mandy Yang: As part of our anti-dilution plan, we spent approximately $18.7 million in Q1 by withholding shares to cover taxes on employees' stock vesting, reducing diluted shares by 441,448 shares. We did not repurchase common stock during the quarter, as we are prioritizing disciplined cash allocation and preserving flexibility for strategic investments and potential acquisition opportunities. We had approximately $269 million remaining under our share repurchase authorization and remain confident in our long-term business outlook. In Q1, we generated $102.9 million in cash flow from operations and $83 million in free cash flow, including proceeds from the sale of the 2025 PTCs. Capital expenditure was $19.9 million for Q1 compared to $9.7 million for Q4.

Convertible notes, we raised in 2021 were due on, March 1st, 2026. And we said all the outstanding principal amount of 632.5 million with our cash on hand.

As part of our anti-dilution plan, we spend approximately 18.7 million in 21 and withholding shares to cover taxes on employees. Start vesting reducing diluted shares by 441,448 shares

We did not repurchase common stock during the quarter, as we are prioritizing disciplined cash allocation and preserving flexibility for strategic investments and potential acquisition opportunities.

We had approximately 269 million dollars remaining under our share repurchase authorization and remain confident in our long-term business Outlook.

In Q1, we generated $102.9 million in cash flow from operations.

And 83 million in free cash flow, including proceeds from the sale of the 2025 ptc's.

Mandy Yang: The increase was primarily due to continued investment in US manufacturing. As of 31 March 2026, after monetizing the PTCs generated in 2025, we had approximately $162.9 million of PTCs on our balance sheet. This includes $108.3 million related to US-made microinverters shipped to customers in 2024, and $54.6 million related to shipments in Q1 2026. We elected direct pay for the 2024 PTCs, which are expected to be refunded through our 2024 tax return filed in April 2025. We have limited visibility into the timing of receipt of the $108.3 million due to extended IRS processing timelines. In March 2026, we revoked our direct pay election.

Capital expenditure was $19.9 million for Q1, compared to $9.7 million for Q4. The increase was primarily due to continued investment in U.S. manufacturing.

as of March, 31st 2026 after monetizing the ptc's generated in 2025, we had approximately 162.9 million of ptc's, on our balance sheet

This includes 108.3 million related to us. Men micro inverters shipped to customers in 2024 and 54.6 million dollars related to shipments in q1 2026.

We elected the right, pay for the 2024 pdc's which are expected to be refunded through our 2024, tax return filed in February in in April 2025. However, we have limited visibility into the timing of receipt of the 108.3 million due to Extended IRS processing timelines.

Mandy Yang: Going forward, we plan to sell PTCs on a regular basis to better align cash inflows with expenses. We expect these sales to be part of our normal course of business, the impact of this approach is included in our quarterly gross margin guidance. On 20 February 2026, the US Supreme Court issued a ruling invalidating certain tariffs previously imposed under the International Emergency Economic Powers Act, or IEEPA. On 20 April 2026, US Customs and Border Protection launched an online portal for companies to submit IEEPA tariff refund requests. As of today, we have submitted approximately $50 million of refund claims through the portal, subject to approval. We currently expect to receive the refunds within the next 90 to 120 days. Let's discuss our outlook for Q2 2026.

In March 2026, we revolve our direct pay election going forward. We plan to sell pdc's on regular basis to better align cash inflows with expenses.

We expect these sales to be part of our normal course of business, and the impact of this approach is included in our quarterly, growth margin guidance.

In addition, on February 2020, 2026, the US, Supreme Court issued. A ruling invalidating certain terrorists previously imposed under the international. Emergency economic Powers Act or IPA on April 2020, 26, US Customs and Border Protection launched an online portal for companies to submit AA Terror. Refund requests

As of today, we have submitted approximately $50 million of refund claims through the portal.

Subject to approval. We currently expect to receive the refunds within the next 90 to 120 days.

Mandy Yang: We expect our revenue for Q2 to be within a range of $280 to 310 million, which includes shipments of 100 to 110 MWh of IQ Batteries. The revenue guidance includes approximately $85 million of safe harbor revenue. We expect GAAP gross margin to be within a range of 42% to 45%, including approximately three percentage points of reciprocal tariff impact. We expect non-GAAP gross margin to be within a range of 44% to 47%, including the reciprocal tariff impact. Non-GAAP gross margin excludes stock-based compensation expense and acquisition-related amortization. We expect our GAAP operating expenses to be within a range of $120 to 124 million, including approximately $45 million estimated for stock-based compensation expense, acquisition-related expenses and amortization, and restructuring and asset impairment charges.

Now, let's discuss our outlook for the second quarter of 2026.

We spent our revenue for Q2 to be within a range of 280 to 310 million.

Which includes shipments of 100 to 110 megawatt hours of.

IQ batteries.

The revenue guidance includes approximately 85 million dollars of Safe, Harbor Revenue.

We stayed there. Gross margin to be within a range.

Of 42 to 45%, including a approximately 3 percentage points of reciprocal tariff impact.

We spend longer at gross margin to be within a range of 44 to 47%, including the reciprocal tariff impact.

Nanga gross margin is good. Star based compensation, expense and acquisition related advertising.

Mandy Yang: We expect our non-GAAP operating expenses to be within a range of $75 to 79 million. With that, I'll open the line for questions.

We spare our GAAP operating expenses to be within a range of $120 million to $124 million, including approximately $45 million estimated for stock-based compensation expense, acquisition-related expenses, and advertising and restructuring and asset impairment charges.

We spend our non Gap operating expenses to be within a range of 75 to 79 million.

We done our open, the line for question.

Operator: Thank you. We will now begin the question-and-answer session. In the interest of time, please limit yourself to one question and one follow-up. If you have additional questions, you may rejoin the queue. At this time, we will pause momentarily to assemble a roster. The first question will come from Brian Lee with Goldman Sachs. Please go ahead.

Thank you. We will now begin the question and answer session to ask a question. You may press star then 1 on your touchtone phone,

If you are using a speaker-phone, please pick up your handset before pressing the keys.

You would like to withdraw your question. Please press star and then 2.

In the interest of time, please let me know yourself to 1 question and 1 follow up. If you have additional questions you may rejoin the Queue. At this time, we'll pause momentarily to assemble a roster.

The first question will come from Brian Lee with Goldman Sachs. Please go ahead.

Brian Lee: Hey, guys. Thanks for taking the questions. Yes, first one, just on the safe harbor, 'cause it's so lumpy here. Can you kind of give us any sense of what the safe harbor expectations are for Q3? I know you said, Badri, 10% to 15% below run rate you originally expected due to the start of your weakness. Can you kind of give us a sense of where you think core revenue trends are into Q3 and Q4? Are you going to recapture, you know, that kind of volume in the back half of the year? Maybe any sense on cadence from here, ex the safe harbor? I had a follow-up on the SST.

Hey guys, thanks for taking the questions. Um, this first 1 just on, um, The Safe Harbor because it's, it's so lumpy here. Uh, can you kind of give us any sense of what the Safe Harbor expectations are for 3 q and then, I know you said bodrey, 10 to 15% below, run rate. You originally expected due to the start of your weakness, can you kind of give us a sense of where you think core Revenue Trends are into 3 2 and 4 q? Are you going to recapture, you know, that kind of volume in the, in the back half of the area? Any sense on, on paid in from here x, the Safe Harbor. And then I had to follow up on the SSD.

Badri Kothandaraman: Brian, our safe harbor revenue for Q2, the estimate is $85 million. That's what we said. Your question is safe harbor estimate for Q3. It is difficult for us to estimate right now, but if I were to give you a number, that between $40 million and $50 million is what I expect safe harbor revenue for Q3. That's my opinion there. Yes, I talked about we expect modest underlying sell-through growth in Q2, the current quarter we are in, compared to Q1. That said, like what I said, Q1 and Q2 sell-through expectations are roughly 10% to 15% below our view. Weaker start is basically due to the challenges we are seeing in general, TPO financing, and unfavorable weather for us.

Um,

So Brian.

Our Safe Harbor revenue for Q2, the estimate is $85 million. That's what we said.

Your question is Safe Harbor. Is to make for Q3.

um,

it is difficult for us to estimate right now.

But if I were to give you a number that between 40 and 50 million is what I expect.

Say Farber revenue for Q3, and that's my opinion there.

Um, then yes.

I talked about.

We we expect modest underlying self through growth in Q2 the current quarter. We are in compared to q1 that said, like, what I said, q1 and Q2 sells through expectations or roughly 10 to 15% below our view.

Um,

we can start is basically due to the challenges. Uh, we are seeing in general.

EPO financing.

Um, and unfavorable weather.

Badri Kothandaraman: What we are very excited about is, you know, Propel, which is our prepaid lease, you know, offering through our partners. I gave you some color on the prepaid lease offering. Basically, the last earnings call, I told you we had 40 installers on Propel. Now we have, as of last week, we have 200 installers. We still have the same 4 states because we are disciplined in not entering additional states until we finish the pilot. Our originations have increased at a very healthy rate, at 200 net originations a week. In fact, I mean, that is a very nice number. That amounts to roughly, you know, 90 to 100 megawatt annual run rate if I freeze that 200 as of today. 200 per week as of today.

for us, but

What we are very excited about is.

you know, propelled which is

Which is our free prepaid, uh, lease, you know, offering through our partners.

And I gave you some color.

On the prepaid lease offering basically the last earnings call. I I told you

We had 40 installers on Propel.

Now.

We have.

As of last week.

We have 200 installers.

We still have the same four states because we are disciplined in

We're not entering additional states until we finish the pilot.

But um,

Our originations have.

Increased at a very, very healthy rate.

To 200 net originations a week.

In fact, uh, I mean that that is a very nice number that that amount

to uh, roughly

you know, 90 to 100 megawatt annual run rate, if I freeze that 200

Badri Kothandaraman: You know, extraordinary reception for Propel, and we have to thank our partners to make that happen. For us, Propel is something we are very excited about. The other one that I'm excited about is in Propel, our battery attach is 84%. Obviously, California drives a lot of battery attach. When we expand it to other states, it might be a little bit lesser than that. We are excited about that because that means for us, more megawatt hours very soon. We expect that in H2 of the year for sure. The other one we talked about is what we are seeing in Europe. We gave you color. We gave you color.

As of today, 200 per week. As of today,

um, so

you know, extraordinary reception for Propel and we have to thank our partners.

Uh to make that happen. Um so for us Propel is something. We are very excited about

The other one that I'm excited about is, um,

In Propel, our battery attached is

84% obviously, California drives.

A lot of battery attached. Um, so when we expand it to other states, it might be a little bit lesser than that. So we are excited about that because that means for us,

More megawatt hours, very soon.

And we expect that in the second half of the year for sure.

Um,

Then the other one we talked about is what we are seeing in Europe. We gave you color.

Badri Kothandaraman: In fact, we gave you a lot of color on Europe, saying that what we are seeing in April compared to monthly run rate in Q1. For example, we are seeing our, you know, double-digit increases for most of the Europe regions. Double-digit percentage increases for most European markets compared with the monthly average that we saw in Europe in Q1. That's being driven by the rising power prices and increasing battery adoption. In Netherlands alone, our battery activations in April increased by approximately 75% compared to the monthly run rate in Q1. In France, that number was 20% in April from the monthly run rate in Q1. In Germany, 27% in April compared to the monthly run rate in Q1. A long answer to your question is basically, we are very encouraged by Propel.

We gave you color. In fact, we gave you a lot of color on Europe. It's saying that what we are seeing in April

compared to, um,

Um, monthly run rate in q1. For example, we are seeing

our, um, you know, double double digit increases for most

of the Europe, Europe regions double digit, percentage increases,

for most European markets compared

Monthly average.

Um, that we saw in Europe in Q1, and that's being driven.

By the rising power prices and increasing battery adoption.

Um, in Netherlands alone.

Our battery activations in April.

Increased by approximately 75% compared to the monthly run rate in q1.

In France.

That number was 20% in April, from the monthly run rate in q1.

In Germany.

27% in April compared to the monthly run rate in q1. So,

long answer to your question is basically, um,

Badri Kothandaraman: We are very encouraged by the fact that we are seeing some green shoots in Europe. Having said that, you know, the market is fickle right now. You're seeing a lot of, you know, dynamics in the market. We don't want to hazard a guess for Q3 and Q4, but this is what we are doing from our side. I haven't talked about the new products, but, you know, we are actively working on four new products. To be brief, that's the fifth-gen battery, the bidirectional charger, the commercial battery, as well as the IQ9 high-powered version for commercial. Of course, the big announcement we made is the SST, and that one is more a 2028 revenue opportunity.

We are very encouraged by Propel.

We are very encouraged by the fact.

That we are seeing some green shoots in Europe.

But having having said that it, you know, the market is fickle right now. You're seeing a lot of, uh,

You know, dynamics in the market. Um,

we don't, we don't want to Hazard a guess for Q3 and Q4, but this is what we are. We are doing from our side and I haven't talked about the new products. But, you know, we are actively working on 4, new products and to be brief.

That's the fifth gen battery.

The bidirectional charger.

Um,

the commercial battery.

As well as the iq9, high powered version for commercial.

And of course, the big announcement we made is the SSD, and that one is more of a 2028 revenue opportunity.

Brian Lee: Yeah, no, appreciate all that color. Maybe just on that last point, the timing for IQ SST 2028, that's helpful. I know you gave a GW sizing for that opportunity. Can you give us a sense of kind of the revenue dollar opportunity for Enphase? Also, how does the Enphase offering, you know, differ from what you're seeing from peers, you know, for those that you know actually have a product? Thank you.

Yeah, no, I appreciate all that color. Maybe just on that last Point. Um, the the timing for it 2028. Um, that's helpful. I know you gave a gigawatt sizing

Raghu Belur: Let me take the second one first. This is Raghu. Hey, Brian. I think we are fundamentally different from at least some of the announcements that we have seen in the market in that we leverage our 20 years of experience in developing distributed architecture products. Think about it, you know, our single-stage resonant converter, which is what is our core technology that we have developed since the inception of the company, high frequency design, soft switching, custom ASIC, and then wide bandgap devices. We were the first guys in 2008 to deploy wideband silicon carbide diode, as an example. Now we are doing GaN.

For that, uh opportunity. Can you give us a sense of kind of the revenue dollar opportunity for in favor and then also how does the end phase offering if different from what you're seeing from peers? Um, you know for those that you know actually have a product, thank you.

Let me take the second 1 first, uh, this rug, um, hey, Brian. So I think we are fundamentally different from at least some of the announcements that we have seen, um, uh, in the market in that that we leverage our 20 years of experience in developing, uh, distributed architecture products. So, think about it, you know, our single stage resonant converter which is what is a core technology that we have dropped since the Inception of the company high frequency design, soft switching, custom music, um, and then White Band cap devices.

Badri Kothandaraman: When you are a completely distributed or a decentralized architecture, you know, it enable, you know, the 342 power modules arranged in a supercluster really brings a tremendous amount of value. What it does is, for example, you get sub-millisecond response times. When you have sub-millisecond response time, now you can target how to get rid of the sidecar completely. No BBU or no storage anywhere in the low voltage system. You can now move all your storage to the medium voltage, medium voltage, section, via VSS. We all know this, when you have a completely distributed architecture, you get very, very high reliability. You know, when you have 342 of these devices, we have built-in 10% redundancy.

Raghu Belur: When you are a completely distributed or a decentralized architecture, you know, it enable, you know, the 342 power modules arranged in a supercluster really brings a tremendous amount of value. What it does is, for example, you get sub-millisecond response times. When you have sub-millisecond response time, now you can target how to get rid of the sidecar completely. No BBU or no storage anywhere in the low voltage system. You can now move all your storage to the medium voltage, medium voltage, section, via VSS. We all know this, when you have a completely distributed architecture, you get very, very high reliability. You know, when you have 342 of these devices, we have built-in 10% redundancy.

We were the first guys in 2008 to deploy White Band. Uh, silicon carbide diodes. As an example. Now, we are doing now, we are doing Gan, so when you are a completely distributed or decentralized architecture, um, you know, it enable, you know, the 342 power, modules arranged in a supercluster, really brings, uh, a tremendous amount of value. What it does is, for example, you get sub millisecond response time and when you have sub millisecond response time, now, you can Target how to get rid of the sidecar completely. So no, uh, no BBU or no storage anywhere in the low voltage system. You can now move all your storage to the medium voltage, uh, medium voltage section, uh, via BSS second. We all know this when you are a completely distributed architecture, um, you get very, very high reliability. Um, you know, when you have 30

Badri Kothandaraman: You can achieve very high uptime, and our target there is five nines, which is very good. Serviceability of that device without having to take the entire rack down. We talked about US supply chain and volume manufacturing. It leverages the same platform that we already have in from a manufacturing point of view. On the cost, again, you know, people don't appreciate this very much, is this, the technology that we have, the single-stage resonant converter, we do what's called soft switching, which means our electromagnetic interference or EMI signature is extremely low. We don't have to build big metal enclosures to enclose these devices to reduce your EMI. That's why this device is, the power module is in a potted polymeric enclosure.

Raghu Belur: You can achieve very high uptime, and our target there is five nines, which is very good. Serviceability of that device without having to take the entire rack down. We talked about US supply chain and volume manufacturing. It leverages the same platform that we already have in from a manufacturing point of view. On the cost, again, you know, people don't appreciate this very much, is this, the technology that we have, the single-stage resonant converter, we do what's called soft switching, which means our electromagnetic interference or EMI signature is extremely low. We don't have to build big metal enclosures to enclose these devices to reduce your EMI. That's why this device is, the power module is in a potted polymeric enclosure.

42 of these devices. We have built in 10% redundancy, um, so you can achieve, uh, very high up time. And our Target, there is 5 9s, which is, um, which is very good and serviceability of that device without having to take the entire, um, rack down. Um, we talked about us supply chain and volume manufacturing, it leverages the same platform that already. Uh, we with the

Have you already have in uh, from manufacturing point of view?

Badri Kothandaraman: We really drive the cost down. The single-stage power conversion means very few components. We drive the cost down. Of course, we price to value, but our costs are going to be very, very low. Very good response time, which means, you know, we can target completely eliminating the SST. Eliminating the SST means you can replace that with a compute rack. More compute rack means more tokens. More tokens means more revenue. We talked about reliability. When you have a supercluster of 342 of these power modules, you get, you know, architecturally correct, you know, redundancy, and you get very high reliability, and you can target 5 nines uptime. Supply chain, volume manufacturing, of course, cost.

Raghu Belur: We really drive the cost down. The single-stage power conversion means very few components. We drive the cost down. Of course, we price to value, but our costs are going to be very, very low. Very good response time, which means, you know, we can target completely eliminating the SST. Eliminating the SST means you can replace that with a compute rack. More compute rack means more tokens. More tokens means more revenue. We talked about reliability. When you have a supercluster of 342 of these power modules, you get, you know, architecturally correct, you know, redundancy, and you get very high reliability, and you can target 5 nines uptime. Supply chain, volume manufacturing, of course, cost.

Enclosure. Uh, so we really drive the cars down the single stage. Power conversion means, very few components, we drive the cost down, of course, we'll price to Value, but uh, but our costs are going to be very, very low. So very good response time which means, you know, we can Target completely eliminating the side car eliminating the side car means uh you can replace that with a computer rack more computer, rack means uh more tokens more tokens means more Revenue. We talked about rail when you have a super cluster of 342 of these power modules, you get uh you know, architecturally correct, uh you know redundancy and you get very high reliability and you can Target 5 lines up time.

Supply chain volume manufacturing and of course cost.

Operator: The next question will come from Praneeth Satish with Wells Fargo. Please go ahead.

The next question will come from prist with Wells, Fargo. Please go ahead.

Praneeth Satish: Good evening. Thanks. We've seen some changes on the installer landscape recently, Sunrun exiting their affiliate channel, Freedom Forever filing for bankruptcy. From what I can tell, neither were really major Enphase users. I guess, do you see an opportunity for Enphase to pick up share as that demand kind of reallocates? Are you seeing any early indications of that today, or is that something that could play out over the next quarter or two?

Good evening, thanks. Um, so we we see some some changes on the installer landscape recently, um, Sunrun exiting their affiliate Channel Freedom Forever filing for bankruptcy, um, from from what I can tell neither we're really major, enfase users. So I guess, do you see an opportunity for enfase to pick up, share as that demand kind of reallocates? And are you seeing any early indications of that today? Or is that something that could could play out over the next quarter or 2?

Badri Kothandaraman: We are not going to talk about our customers today. Sunrun is our customer. We have a very good relationship with them. We're not gonna talk about that. On Freedom, we do zero business with them. We view that the market will redistribute itself amongst the existing installer base, and we do expect to get our fair share of it.

Um we are not going to talk about our customers today Sunrun is our customer. We have a very good relationship with them but not going to talk about that. Um, but on freedom, we do zero business with them so we view we view uh, that the market will redistribute itself.

Uh, amongst the existing installer base and we do expect to get our fair share of it.

Praneeth Satish: Got it. Maybe shifting gears to C&I. I think for Q1, you previously indicated potentially generating around $5 million or so of revenue for C&I. Maybe I missed it, but is that, can you share where C&I revenue landed in Q1? What is your, what's embedded in the Q2 guide for C&I? Should we expect C&I revenue to increase every quarter this year based on the pipeline that you're seeing?

Badri Kothandaraman: Yeah. We did in Q1 a little more than $5 million. We did in the high single digits, little more than five. At least for us, you know, until we have a nice pipeline established, we do expect it to be lumpy. The opportunity for us is that C&I installers, C&I developers do have a safe harbor window as well. That safe harbor window will be closing in. They have to make their plans by early July. For that, we have two things, or we have actually three products for that. One is our already existing 208 volt three-phase product, which is IQ8P-3P, which we have been, you know, supplying for some time.

Got it, and then, uh, maybe shifting gears to, to see an eye. Um, so I think for q1, you previously indicated, uh, potentially generating around 5 million or so, of of revenue for for cni. Um, maybe I missed it. But is that can you, can you share where where cni Revenue landed in q1? Uh, and then, what is your, uh, what's embedded in the Q2 guide for cni? Um, and should we expect? Cni Revenue to increase every quarter this year based on the pipeline that you're seeing.

Yeah, the it. We did in q1. A little more than $5 million we did. Uh, in the high single digits, little more than 5. The um, having said that, you know, cni is a very lumpy business.

And, uh, at least for us, you know, until we have a nice pipeline established, uh, we do expect it to be lumpy. But, but, um, the opportunity for us is, is that, um,

Um, CNI, CNI, installers, CNI developers?

You do have a safe harbor window as well, and that's a far more—window will be closing in. They have to make their plans by early July, and for that we have two things, or we have—actually, we have three products for that. One is our already existing—

Badri Kothandaraman: The other is our brand new IQ nine N 427 product, which is what we introduced very recently. The third one, which is coming, and we plan to start shipping in Q3, that product is the 548 watts, even high-powered version. That is suitable for safe harbor, which is because, you know, if they are going to be using these later in the years, the panel sizes are going to be even more. Today, for example, the panel sizes are between 595 watts and 650 watts in the commercial business. It's going to keep going up a little more. That's why the 548 watts is also exciting. We're very excited by the C&I business. In general, directionally, we expect it to continuously grow until we establish a pipeline.

208 volt 3-phase product, which is iq8 p, which we have been, you know, supplying for some time. The other is our brand new iq9 and 427 product, which is what we introduced very recently that the third 1, which is, which is coming and we plan to start shipping in Q3 that product is the 5448 Watts, even high, powered version, that is suitable for Safe Harbor, which is because, you know, if they are going to be using these later in the Years, um,

You know, the panel the panel sizes are going to be even more today. For example, the panel sizes are between 595 watts and 650 Watts.

Badri Kothandaraman: You know, in terms of quarterly, it is going to be a little lumpy at the beginning.

In the commercial business, it's going to keep going up a little more, so that's why the 548 watts is also exciting. So we're very excited by the CNI business. In general, directionally, we expect it to continuously grow until we establish a pipeline. But, you know, in terms of quarterly, it is going to be a little lumpy at the beginning.

Operator: The next question will come from Colin Rusch with Oppenheimer. Please go ahead.

The next question will come from Colin Rusch with Oppenheimer. Please go ahead.

Colin Rusch: Thanks so much, guys. Can you talk a little bit about the geographic distribution of where the channel inventory is? Is it primarily in the US, or are you seeing some channel inventory build up in the EU as well?

Badri Kothandaraman: It's mostly the US.

Thanks so much, guys. Can you talk a little bit about the geographic distribution of where the channel and the toy is? Is it primarily in the US? Are you seeing some channel inventories build up in the EU as well?

Badri Kothandaraman: It's mostly the US.

Um, it's it's it's mostly the US.

Colin Rusch: Okay, thanks. Can you talk about the customer maturity with the solid-state transformer? You know, how soon can we start seeing some piloting of that product? You know, how many customers are you engaged with now in terms of potential testing here over the near term?

Badri Kothandaraman: Yeah. You know, we have talked to of the order of 20 customers or so, just prospective customers. I think, the most important thing is to get a full demonstration system ready, which is what we are targeting for this year. Once that's done, the natural following step is there are enough people out there who will be willing to test the system, but we need to get to the demonstration system, which is what we will be ready with this year. That's what we are singularly focused on. Followed up by 2027 will be about customer pilots, then 2028 will be about, you know, volume shipments. That's the sequence of events that we have followed.

Former, you know, how soon can we start seeing some pilot—uh, piloting of that product? And, you know, how many customers are you engaged with now in terms of potential testing here over the near term?

Badri Kothandaraman: We do have a detailed investor presentation which is on the website as well as on the SST page. One of the things we'd like to highlight is we started working with our team, Raghu and the CTO team. They basically recognized the opportunity that we have in the SST data center space about 9 months ago. We started working on feasibility 9 months ago. Since then, over time we have gradually assigned approximately 80 engineers in the company to be working on SST, and they're all working full time.

Yeah, you know, we have talked to, a few of 20 customers or so the perspective customers and I I think, um, uh, the most important thing is to get a demonstrative full demonstration system, ready, which is what we are targeting for, uh, for this year. Uh, 1 step for natural. Following step is, there are enough people out there who want to will be willing to test the system, but we need to get to the demonstration system, which is what we will be ready with, uh, this year. And that's what we are. Singularly focused on, um, and Then followed up by 2027. We'll be about, uh, customer pilots and then 2028 will be about, uh, you know, volume shipments. So that's the sequence of events um, that that we have we uh we we have we do have a detailed investor presentation, which is on the website as well as on the SSD page. Uh 1 of the things we'd like to highlight is we started working.

um, our yeah, our team um, Ragu and

The CTO team. They they basically recognize

The opportunity.

That we have, um, in the SSD data center space about 9 months ago and we started working on feasibility 9 months ago.

and so, um,

You know, since then, um,

Over time, we have gradually assigned, you know, approximately 18 engineers in the company.

Badri Kothandaraman: We also took the opportunity to think strategically and said, how do we create a lot more room for SST? We restructured the company in Q1, basically to focus on SST. You saw focus on SST without changing our operational expense structure. We got that done. Then, we have worked on the basic power module. Again, you can find a lot of details in the industrial relations deck as well. We have built the basic power module. We have it functional. Now, the next step is to basically put together the full system, which is a lot more complex. We expect to demonstrate that by the end of the year.

To be working on SSD, and they are all working full-time.

Um, we also took the opportunity to think uh, strategically and said, how do we create a lot more room for SSD. So we restructured the company in q1,

Um, basically to to, uh, to focus on SSD and you saw, you know, focus on SSD without without changing our operational expense structure.

And so we got that done.

and then, um,

We we have we have worked on the basic power module. Again, you can find a lot of details in the investor relations, uh, you know, deck as well. We have built the basic power module, we have it functional. And now um, the next step is to basically put together the full system, which is a lot more complex

Badri Kothandaraman: Once we do that, the customer engagements are going to be there. We target pilots, customer pilots throughout 2027, and volume shipments in 2028.

And we expect to demonstrate that by the end of the year. Once we do that, the customer engagements are going to be, uh,

Um, there and we target Pilots customer Pilots throughout 2027.

And volume shipments in 28.

Operator: The next question will come from Philip Shen with Roth Capital Partners. Please go ahead.

The next question will come from Philip Shen with Roth Capital Partners. Please go ahead.

Philip Shen: Hi, all. Thanks for taking my questions. You know, Madhur, you said that the Q2 sell-through was 10% to 16% below expectations. You cited TPO challenges. You know, we've been talking about tax equity, pausing, and there's just a fair amount of, I guess, challenge out there. I was wondering, you know, with the core revenue for Q2 being down to about $210 million, down from $250-ish million in Q1, you know, what does Q3 and Q4 look like? You know, this is a seasonally strong time, Q2 and Q3, this TPO challenge with this tax equity pause may endure or linger for a bit.

Hi. All thanks for taking my questions. Um, you know, budget you said that the Q2 sell through

Was 10 to 15% below expectations. Um, you started CPO challenges?

Uh, you know, we've been talking about tax Equity uh, pausing and there's just a fair amount of I guess challenge out there. So I was wondering, um,

you know, with the core revenue for Q2 being

down to about, um, $210 million

Uh, down from 250, ish million in q1.

now what does Q3 and Q4 look like uh you know this is a seasonally strong time Q2 and 3

Um, but this TPO challenge with this tax equity—pause—

Philip Shen: I know you can't guide or you haven't guided for Q3, but was wondering if you might be able to give us some qualitative color on, or quantitative, on Q3 and Q4. Thanks.

May endure or linger for a bit. So I know you can't guide or you haven't got it for Q3 but was wondering, if you might be able to give us

Badri Kothandaraman: Yeah, I mean, at this point, I will tell you what I see, you know, that's, that's basically like what I told you the last time. That's my opinion. As we said, you know, we expected Q1 sell-through to be around in the $250 million range, and we were 10% to 15% below that number, basically. We over-shipped approximately $25 million in Q1. That's why I said we ended the channel with a little more inventory than what we would have liked. We are correcting that immediately within 1 quarter itself by under-shipping in Q2 by that number. We do expect the native sell-through in Q2 to be a little better than Q1, driven by the usual seasonality.

Some qualitative color on or quantitative on Q3 and 4. Thanks.

Yeah, I mean, I at this point I will I will tell you what I see, but, you know, the that's that's basically like what I told you the last time. That's my opinion.

um,

and as we said, you know, we expected uh,

Q1 sell through to be around.

in the $250 million range, and we were

10 to 10, 10 to 15% below. That number, basically,

um, and so

we we over shipped approximately 25 million dollars in q1.

that's why I said, we

Under shipping in, Q2 by the, by that number, we do expect the native sell through in Q2 to be.

Badri Kothandaraman: What could surprise us in Q3 and Q4 is the few factors that I just highlighted a few minutes ago. What could surprise us is the Propel could surprise us. There, we are proceeding with some caution. We are piloting in four states now. We are at a run rate of 200 originations a week, which is a non-trivial number. 200 originations a week. That, the percentage increase on the originations a week is fierce. I mean, we are very happy with the percentage increase. We are also very happy with the number of installers. Our vision with Propel was to give prepaid lease, you know, to our long tail of installers.

A little better than q1. It driven by the usual seasonality.

Um, what could surprise us in Q3?

And Q4 is the few factors that I just highlighted a few minutes ago. What could surprise us is the propel.

Could surprise us.

There. Uh, we are proceeding with some caution.

We are piloting in 4 States now.

We are at a run rate of 200 originations a week, which is a non-trivial number.

200 originations a week and and that the percentage increase on the originations a week is is is, is 12. I mean, we are, we are very happy with the percentage increase. We are also very happy

with the number of installers, our vision with Propel was to give

prepaid leads.

Badri Kothandaraman: I won't declare success right now because we are still in the pilot, but it is going in the right direction. Propel comes with an 84% storage attach. Of course, that's a high number because of California, but, you know, that's a very encouraging number for our batteries as well. That's one vector. The other vector is basically what I talked about in Europe. You know, we talked about the business starting to show some sign of strength on batteries in Netherlands, in France, and in general, even for solar. We are already seeing that in April compared to Q1. That's the second thing. The third one is the IQ Battery 10C.

You know, two-hour-long tail of installers. And, uh, I—I won't declare success right now because we are still in the pilot, but it is going in the right—it is going in the right direction.

Uh, Propel comes with an 84% storage attached. Of course, that's a high number because of California.

But, you know, that's a very encouraging number for our batteries as well.

So that's one vector. The other vector is, um,

Um, basically what I talked about,

In Europe.

you know, we talked about the business starting to show some signs on, uh, batteries in Netherlands, in France and in general, even even for solar

So, we are already seeing that in April compared to, um,

Q1.

Badri Kothandaraman: You know, of course, the volumes in Q1 were a little light due to the 25C abrupt cutoff. We are making a lot of progress on the IQ Battery 10C. We are qualifying, you know, 64 utilities have accepted our IQ Meter Collar. You know, with the Propel ramping, IQ Battery 10C will also be ramping with new installers who haven't used Enphase before. That's that. On the small commercial front, I talked about more opportunities on small commercial in terms of before the safe harbor window closes. I believe the commercial developers are going to need a solution for 2027 through 2030. I mean, 2028 through 2030.

So that's the second thing. The third 1 is um, the IQ battery 10 C.

Um, you know of course the the volumes in in q1 were a little light due to the 25d abrupt cut off.

But, uh, we are making a lot of progress on the IQ battery. We are qualified. Um, you know, I'm 64 utilities have accepted our meter caller and, um, you know,

With with the Propel ramping IQ battery can see will also be ramping with with new installers who, who who haven't used in face before. So, um, that's that. And then on the small commercial front, I talked about

more opportunities on small commercial.

In terms of, uh, before the Safe Harbor window closes.

I believe, uh,

the commercial developers are going to need a solution for 27.

Badri Kothandaraman: I expect, you know, both steady increase in the commercial business as well as, some, you know, some potential safe harbor in, you know, which will be shipped in Q3, ordered hopefully by the end of Q2. As you can see, there are a lot of moving parts. We see, you know, the challenges in the last few weeks, like you correctly pointed out, you know, tax equity challenges, installer bankruptcies, they are, they are never good for the business. We are not the ones to complain. We try to do whatever we can do, and I think all of these initiatives are, you know, something that we'll be working on.

Through '30—I mean, '28 through '30. So, um, I expect, you know, both steady increase in the commercial business as well as

uh, some

you know, some potential say forward.

In, you know, which will be shipped in Q3, ordered hopefully by the end of Q2.

Um,

so as you can see that is there are a lot of moving parts. We see

um,

uh, you know, um,

The.

Uh the challenges in the last few weeks, like you correctly, pointed out.

Tax Equity, challenges installer bankruptcies. Um,

They are, they are never good for the business. But, um,

We are not the ones to complain, we try to do whatever we can do. And I think all of these initiatives are, uh,

You know, something that we'll be working on.

Philip Shen: Okay. Thanks, Raghu. Secondly, as it relates to a quick housekeeping question, in your 10-Q, you guys had a commentary about how you entered into a $30 million secured revolving credit facility with a privately held company. I'm wondering if this might be SolSource Solutions, the company that you guys do Propel with. Back on SST for a moment, Raghu, I think you talked about, you know, pricing the value with your low cost structure. Just was wondering if you could share what margins you guys might be targeting for this SST product. Thanks, guys.

Okay. Thanks. Um,

Secondly, as it relates to a quick housekeeping question in your 10-Q.

uh, you guys had, um,

uh, commentary about how you entered into a 30 million, uh, secured revolving credit facility with a probably held company. Uh, I'm I'm wondering if this might be Soul Source. Uh, the company that you guys do propelled with and then back on SST for a moment. Um, bro, I think you talked about, you know, price and the value. Um, with your Co with your low cost structure. Just was wondering if you could share um what margins? You guys might be targeting for this SST product. Thanks guys.

Raghu Belur: It's very early to tell, Phil, about what our cost is, what our price and cost is going to be. We have a rough estimate of it, but it's way too early to tell right now. We are focused on continuing the development so we can get to that customer demo by the end of this year. We are also investigating, because we are using a very similar module to what we already do for solar, we are looking at if there is any IRA advantages here for us as well. Too early to tell. Right now, the focus is on getting this 1.25 MW customer demo by the end of this year.

It's very early to tell, Phil, about what the costs are. What are—

First made of it, but it's way too early to tell right now, we are focused on, um, continuing the, um, the development. So we can get to that customer demo by the end of, uh, by the end of this year. And we are also investigating because we are using a very similar module to what we already do for solar. We are looking at if there is any Ira advantages here for us as well.

Raghu Belur: Over time, as we get deeper and deeper into the design, we'll be happy to share with you the details.

Badri Kothandaraman: On the $30 million line, we are not breaking out the end customer. Yeah, here, Philip Shen.

So, too early to tell right now. The focus is on getting this 1.25-megawatt customer demo by the end of this year. But over time, as we get, um, deeper and deeper into the design, we'll be happy to share with you the details.

And on the 3000 line, uh, we are not breaking out the in in the customer.

Yeah, here sir.

Operator: The next question will come from Julien Dumoulin-Smith with Jefferies. Please go ahead.

The next question will come from Julie and Dolan Smith with Jeffrey's. Please, go ahead.

Julien Dumoulin-Smith: Excellent. Maybe actually just to pick it up off where Phil left it off, maybe just to pick up on the tax equity piece and the target. You talk about 200 originations a week. I mean, what are you thinking quarter over quarter into Q4, what that target installer partnership would look like? I mean, how many are you pursuing? How do you think about tax equity as a limitation on the Propel program to ramp? What are the other factors when you think about continuing to get this program up and going? If you can speak to it in those terms.

Excellent. Um, maybe actually just to pick it up off where Phil left it off, maybe just to pick up on the the tax Equity piece and the target. You talk about 200 originations a week. I mean, what are you thinking quarter of a quarter or into 4q? What? That Target installer? Uh, partnership would look like, I mean, how many are you pursuing? How do you think about tax Equity is a limitation on the Propel programme to ramp? Um, what are the other factors when you think about continuity to to, to get this, uh, program up and down?

Badri Kothandaraman: Yeah, I mean.

Julien Dumoulin-Smith: This is part of your conscious ramping.

Badri Kothandaraman: Right. Right. You know, yeah, Propel is offered through our partners, so we are working very closely with them there. You know, having said that, you know, my wish is to basically get up to a run rate of 500 originations a week by the end of Q4. That's my wish. Today, we have 200 installers that are using Propel. Again, my desire and why we launched Propel is, you know, basically, that number should be a healthy multiple of 200. That's why we launched. That's one of the reasons us and our partner, distribution partner, we launched, you know, this TPO-led program, Propel, is because we wanted to bring that access to the long-tail installer with an ease of doing business.

Going. Um, if if you can speak to it in those terms in theory, it was a part of your conscience, ramping.

Right, right. Um,

You know, yeah, Propel is offered.

Through our partners. So we are working very closely with them.

There, uh, you know, having said that, um,

you know my my my wish my wish is to is to basically get up to run rate of uh

500 originations a week.

By the end of Q4.

And that's my wish.

Today, we have 200 installers that are using Pro, that are using Propel again. My desire on why we launched Propel—

is um,

You know.

Basically.

um,

That, that number should be.

A healthy multiple of 200.

That's why we launched, that's, that's 1 of the reasons us. And our, our partner distribution partner,

Um, we launched we launched.

You know, this TPU lead program propel.

is because we wanted to bring

that access.

Badri Kothandaraman: The tax equity question is a, is a better question for, you know, Propel. We are not going to make any comments on that, you know, right now. Fair.

Uh, to the long tail installer with an ease of doing business.

Badri Kothandaraman: The tax equity question is a, is a better question for, you know, Propel. We are not going to make any comments on that, you know, right now. Fair.

The tax, the tax equity question is a better question for...

For uh, you know, Propel, we we are not going to make any comments on that.

you know, right now there

Julien Dumoulin-Smith: Got it. All right. Well, look, I'll leave it there then. Thank you so much. Appreciate it.

Got it. All right. Well, look.

Badri Kothandaraman: Thank you.

I'll I'll leave it there then. Thank you so much. Appreciate it.

Thank you.

Operator: The next question will come from Eric Stine with Craig-Hallum. Please go ahead.

The next question will come from Eric Stein with Craig Hallam. Please go ahead.

Eric Stine: Hi, everyone. Maybe just sticking with Propel, can you just talk about, you know, I know you're piloting it in four states. What is the limiting factor to expanding that to other states? I would assume when you're talking about piloting, it's you going hand-in-hand with your, you know, TPO partner to installers, educating those installers. Am I thinking about that correctly, and what would that timeframe be to expand to different states?

Hi everyone. Um, so maybe just sticking with Propel. Uh, can you talk about—you know, I know you're piloting in the enforced states. I mean, what is the limiting factor to expanding that to other states? I mean, is this a—I mean, I would assume when you're talking about piloting, it's you going hand in hand with your, you know, PPL partner to installers, educating those installers. Um, I mean, am I thinking about that correctly, and what would that time frame be to expand to different states?

Badri Kothandaraman: Right. It is, you know, once again, I'm answering on behalf of our TPO partner. Basically, what we want to look at is that entire chain. That is, you want to basically start from originations, you want to look at installations, you want to look at M1, M2, M3, then you want to be able to appropriately monetize the tax credits. That takes time. Therefore, you know, that usual time could be from originations to monetization could be four to five months. We are still, you know, that's why we are still in the pilot. All of that needs to execute flawlessly. Ease of doing business for the installers is very critical. We cannot keep changing parameters on the installers.

But it is, it is. Yeah, you know, once again, I'm answering on behalf of, uh, our TPO partner. So basically, what we want to look at is that entire chain.

That is, you want to basically start from originations?

Uh, you want to look at installations, you want to look at them—M2, you know, M1, M2, M3. Then you want to be able to properly monetize the tax credits. So, uh, that takes time.

So, therefore, um, you know, and that usual time could be—from originations to monetization—could be...

4 to 5 months.

And we are still, you know, that's why we are still in the pirate. All of that needs to execute flawlessly.

Badri Kothandaraman: We need to be able to, you know, TPO needs to be able to monitor, I mean, to monetize the tax credits properly. See, again, I'm, I am trivializing their work. They have a lot of work to do, so, we need to prove that the entire chain works properly. Until then, we will not be doing a broad launch, like what I stated. Having said that, you know, what are we piloting for? We are piloting to see if we can support a lot of installers. The answer to that is yes. Since the last earnings call, at that time, there were 40 installers. Now there are 200 installers. The last earnings call, the number of originations was an order of magnitude low. Now it is 200 a week, which is, and climbing rapidly.

Business for the installers is very critical. We cannot keep changing parameters on the installers.

Um, we need to be able to, um, you know, uh, Poe needs to be able to monitor—I mean, to monetize the tax credits properly.

Uh yeah, again I'm I am trivializing.

Their work, they have a lot of work to do, so, and we need to prove that, um, the entire chain works properly.

And until then, we will not be doing a

broad launch, like, what I stated having said that, um,

You know, what are we piloting for? We are piloting to see if we can support a lot of installers.

and,

The answer to that is yes since the last earnings call, at that time, there were 40 installs. Now, there are 200 installers. The last earnings call is the number of originations.

Was an order of magnitude low.

Badri Kothandaraman: We are closely monitoring it. We are working with our partners, and the moment we are ready to launch, you know, we'll be transparent about it.

Now, it is 200 a week which is n climbing rapidly.

Badri Kothandaraman: We are closely monitoring it. We are working with our partners, and the moment we are ready to launch, you know, we'll be transparent about it.

So, um, we are closely monitoring it. We are working with our partners.

Eric Stine: Yeah. Propel is one of the things that, you know, potentially mean improvement in H2 of the year. I mean, fair to say that this is, you know, much more about 2027 and beyond than potentially positively impacting H2.

And um, the moment we are, we are ready to launch. Uh, you know, we'll be transparent about it.

Yeah, um, is it—I know that you...

That's Propel is one of the things that you know, potentially mean improvement in the second half of the year. But I mean, fair to say that this is, you know, much more about 2027 and beyond than potentially positively impacting the second half.

Badri Kothandaraman: That's right. I think, I think you're thinking about it right. Positively impacting the second half and also in 2027. That's right. Don't forget the other things which are what we do, nuts and bolts, is basically the Europe opportunity is a big one. We are doing, we are doing well there, especially Netherlands has picked up steam. France has picked up steam. There we are actively doing things. Once again, we are holding 2 to 4 homeowner events a week. Each of these homeowner events are attended by almost 150 homeowners, each one. Our target for running, you know, every event, you know, I've told my team every event should at least generate half a megawatt hours.

That's right. I think I think you're thinking about it. Write positively impacting, the second second half and, and also in 2027. That's right. And don't forget the other things which are what we do. Not send quotes is, is is basically the Europe opportunities, a big 1. We are doing

we are, um,

Doing well there, especially Netherlands has picked up steam.

Uh France has picked up steam, and there we are, actively doing things. Uh once again we are holding 2 to 4 home events a week.

Each of these homeowner events are attended by

Um, almost 150 homeowners each 1.

And our target for, for, on a, you know, um, every event—you know, I told my team, every event should at least generate half a megawatt-hour.

Badri Kothandaraman: Basically, if you do four events, that should generate 2 MWh a week, and that should only compound as we go. We are going to replicate the same thing in France as well, where we have 400,000 install base. We are introducing our third-generation battery. Third-generation battery, sorry, fifth-generation battery. The form factor is very, very small. It's 50% energy density using 100 ampere-hour prismatic cells. A 40% lower cost, our cost, internal cost, and we expect to translate that into a lower price for our distribution partners. Another very exciting product. The other one, I didn't talk too much on the BiDi. On the BiDi, we are gearing up for a launch in the Q4.

So basically, if you do four events that should generate 2 megawatt-hours a week, and that should only compound as we go.

so, um,

We are going to replicate the same thing in France as well, where we have a 400,000 installed base.

And we are introducing our third-generation battery, third-generation battery.

The, the form factor. Oh, sorry, fifth generation battery. The form factor is very, very small. It's 50% energy density using 100 amp-hour prismatic cells, a 40% lower.

Cost our cost internal cost and we expect to translate that into a lower price for our distribution Partners. So um,

That's another very exciting product.

Badri Kothandaraman: Again, a very simple product, which is along with the IQ Meter Collar and just the charger. It can provide V2X, which is both V2H, vehicle to home resiliency, and vehicle to grid, VPP. That's another product. There we have two partnerships with North American OEM car providers, which we will announce when we are ready. That's that. Then, of course, IQ9. We're launching IQ9 in residential markets. We have already launched for the commercial market. We are going to introduce higher powered version. That business, especially with our domestic content, FIOC compliance, US manufacturing, all of that is a very big advantage there. That business takes a little time. It's a design-in business. So we expect to make steady progress there.

The other one, I didn't talk too much on the bite. We are gearing up for a launch in the fourth quarter.

Again, a very simple product, which is along with the meter collar.

And just the charger, it can provide.

Uh, v2x, which is both v2h vehicle to home resiliency and vehicle to grid.

PPP.

so that that's another product and and and there we have 2 Partnerships with North American OEM

Car providers, which, which we will announce when we are ready.

So that's that, that's that. And then, of course, IQ9, we're launching IQ9 in the residential markets. We have already launched for the commercial market. We are going to introduce a higher power, higher powered version. So, that business,

Um, especially with our domestic content.

Fiat compliance us manufacturing. All of that is a very big Advantage there. That business takes a little time. It's a design in business.

Badri Kothandaraman: The last one, which I talked about, is the commercial battery. The commercial battery, it's a gigawatt hours of TAM, and we are talking about batteries for small and medium businesses. Schools, hospitals, churches, small businesses, the gas stations, convenience stores. All of those, they typically need battery size anywhere between a 50 kilowatt-hour system and 250 to 300 kilowatt-hour system. Now basically we will be able to offer that along with our IQ9 on the PV side, on the solar side. Now we will have an 80 kilowatt-hour battery, and you can string 25 units of those. You can go up to 2 megawatt hours. We are extremely excited by that offering as well.

And it's 'and', and so we expect to make steady progress there. The last one, which I talked about, is the commercial. Better.

Uh, the commercial battery. It, it's

3 is for a small and medium businesses, schools hospitals, you know, churches, small businesses, the, um, um, um, gas stations, uh, you know, can be a convenience stores. All of all of those. They typically need battery size anywhere between a 50 kilowatt hour system and 250 to 300 kilowatt hour system. So, um, now basically, we will be able to offer that along with our iq9 on the, on the, on the, on the previous side on the solar side and now we will have 80 kilowatt hour our battery and you can string 25 units of those. You can go up to 2 megawatt hours

Badri Kothandaraman: We're doing lots of things, and we expect a, you know, sequential growth. Of course, it's a turbulent market. We are controlling what we can and of course the IQ SST, which we talked about.

So we are—we are extremely excited by that offering as well. So we're doing—we're doing lots of things.

And we expect, you know, sequential growth, of course it's a turbulent Market.

but,

um,

we are controlling what we can, and, of course, the iqss, which we talked about,

Operator: The next question will come from Dylan Nassano with Wolfe Research. Please go ahead.

The next question will come from Dillon Nassano with Wolf Research. Please go ahead.

Dylan Nassano: Yeah. Hi, thanks for taking my question. Badri, I would just love to get your take, I guess, on Europe, just in terms of how durable you think this bump is. I mean, you know, that market went through a boom for kind of similar reasons back in 2022, and it was followed by a pretty severe kind of destocking cycle. Just wondering if you could kind of compare and contrast, you know, where we're at today.

Yeah. Hi. Thanks for taking my question. Um, bodri. I would just love to get your take, I guess on Europe. Uh, just in terms of how durable you think this bump is? I mean, you know that market went through a boom for kind of similar reasons back in 2022 and it was followed by a pretty severe kind of De stocking cycle. So just wondering if you could kind of compare and contrast you know where we're at today.

Badri Kothandaraman: Yeah, I mean, it is anybody's guess. Yeah, I share with you the question and the concern. The last time it was an extended, you know, the Ukraine crisis basically led to an explosion of demand. This one may be more modest, nevertheless, we are seeing an increase. I am not sure how long it'll last. There are, you know, there are some fundamentals there, which is basically, you know, batteries are good in general. Europeans are, you know, I have to say that Europeans are a little more advanced than the US here. Almost every region is accelerating to a battery first market. Battery first pulls everything else. Solar, EV, chargers, energy management. It pulls everything.

yeah, I mean it is anybody's, guess I

Yeah, I shared with you the question and the concern the last time, it it was an extended, you know, the Ukraine crisis uh basically led to an explosion of demand. Um

This 1 may be more modest, but nevertheless, we are seeing an increase. I am not sure how long it'll last. Um, but but uh, there are, you know,

There are some fundamentals there, which is, which is basically, you know, batteries are good in general, and the Europeans are, are, uh, you know, I have to say that Europeans are a little more advanced.

And the US here, almost every region is—is—is—

Is is accelerating to a battery First Market.

Badri Kothandaraman: What we are going to be doing there is, of course, we are going to get more competitive. We talked about sharper pricing. We already made necessary pricing corrections on microinverters in December. We are making pricing corrections on batteries in May, which is next month. We already made battery pricing corrections in the US in March. We are laser-focused on expanding our battery business. I talked about that. In Europe, we are going to go from a third generation battery to a fifth generation battery in Q4. That will be a massive leap there in terms of cost, in terms of pricing, in terms of installation, and in terms of space.

And battery first pulls, everything else solar. Um, EV chargers, uh, energy management. It pulls everything.

And what we are going to be doing there is, of course, we are going to get more competitive. We talked about sharper pricing.

We already made necessary pricing corrections on microinverters in December. We are making, uh, pricing corrections on, on batteries, uh, in May, which is next month. Uh, and we already made battery pricing corrections in the U.S. in March, so

We are laser focused on expanding our battery business. Yeah, I talked about that in Europe.

We are going to go from our third-generation battery to our fifth-generation battery.

In Q4.

Badri Kothandaraman: We just did, you know, one of the things we before we finalize our design. It's our practice to show it to installers and get to a group of installers and get limited or get some feedback from them. We did that in Q1. We did that in France, in Netherlands, in Germany, and we got a lot of feedback on the battery, and mostly very positive. For us, it is all about batteries there. You know, batteries will pull through solar, and I think we are making the right necessary steps for us to grow through 2026.

And so, that will will, uh, will be a will be a massive leap there in terms of cost in terms of pricing, in terms of installation, in terms of space. Um, so we just did, you know, 1 of the things we, before, we finalized our design. It's our practice to

Um, show it to installers and get to a group of installers and get limited—or, or, or get some feedback from them. So we did that in the first quarter; we did that in France, in Netherlands, in Germany, and we got a lot of feedback on the battery—and mostly very positive.

So, for us, it is all about batteries there. Um, and and you know, batteries will pull through solar

And I think we are making the right, necessary steps for us to grow.

Through 2026.

Dylan Nassano: Great. Thank you. I'll take the rest offline, in interest of time. Thank you.

Badri Kothandaraman: Thank you.

Great, thank you. I'll take the rest offline and interest of time. Thank you.

You.

Operator: Again, if you have a question, please press star and then one. The next question will come from Vikram Bagri with Citi. Please go ahead.

Again, if you have a question, please press star. And then 1. The next question will come from vicram baggery with City. Please go ahead.

[Analyst] (Citi): Hi, it's Ted on for Vic. Thanks for taking the questions. I wanted to ask about the guidance for Q2. It looks like it still includes tariff impact. Are you able just to share how much of the inventory roughly is still impacted by those tariffs? And would there be any interplay between the possible refunds that you may receive on that? And then could you just also talk about the progress being made on ramping the non-China battery cell supply? What's the outlook for that mix?

[Analyst]: Hi, it's Ted on for Vic. Thanks for taking the questions. I wanted to ask about the guidance for Q2. It looks like it still includes tariff impact. Are you able just to share how much of the inventory roughly is still impacted by those tariffs? And would there be any interplay between the possible refunds that you may receive on that? And then could you just also talk about the progress being made on ramping the non-China battery cell supply? What's the outlook for that mix?

Um, the possible refunds that you may receive on that, and then could you also talk about the progress being made on ramping the non-China battery cell supply? What's the outlook for that mix?

Badri Kothandaraman: Yeah. In terms of tariffs, like what I said, we do expect, you know, Mandy said we have applied for a $50 million refund, and we do expect that, you know, the decision and the refund to come within 90 to 120 days. As far as we are concerned on our gross margin guidance for Q2, that basically includes, you know, there is a benefit for us of a couple of percent, 2% in gross margin due to the change in reciprocal tariff. Note that still, even now, all of, you know, most of the countries are at 10% right now. You know, right now, incorporated in our current guide is a benefit in gross margin of approximately 2%.

Yeah. The um, in terms of tariffs, like what I said we do expect, you know, Mandy said we, we have applied for a 50 million dollar refund and, um, uh, we do expect that, you know, to, basically the decision

Um, and the refund to come within 90 to 120 days. As far as we are concerned on our gross margin guidance for Q1...

u q Q2

That that basically uh includes you know, there is a benefit for us of a couple of percent 2% in gross margin due to the change in reciprocal tariff, not that still um even even now um all of you know, most of the countries that are at 10% right now.

Badri Kothandaraman: We said in our prepared remarks that this tariff, you know, the reduction in tariffs helps us to be a little more aggressive on our batteries, and we have taken advantage of that to increase our demand by adjusting the pricing to be a little bit sharper in both Europe as well as the US.

So you know, right now, incorporated in our current guide is the benefit in gross margin of approximately 2%, and we said in our prepared remarks—

that, um,

This.

this this tariff, uh,

You know, the reduction in tariffs helps us to be a little more aggressive.

On our batteries, and we are taking advantage of that to increase our demand by adjusting the pricing to be a little bit sharper in both Europe as well as the US.

[Analyst] (Citi): Got it. That's very helpful. Thank you. I have one follow-up. Just going back to the prepaid lease offering, do you have a view on where you think the prepaid lease product could be as a portion of the total TPO market this year? Not necessarily for Propel, but just looking at the market, as a whole.

[Analyst]: Got it. That's very helpful. Thank you. I have one follow-up. Just going back to the prepaid lease offering, do you have a view on where you think the prepaid lease product could be as a portion of the total TPO market this year? Not necessarily for Propel, but just looking at the market, as a whole.

Got it. That's very helpful. Thank you. And I have one follow-up. Um, just going back to the prepaid lease offering—do you have a view on where you think the prepaid lease products could be, as a portion of the total TPO market this year? So not necessarily for Propel, but just, um, looking at the market, um,

Badri Kothandaraman: It's hard to say and my comment should be taken with a grain of salt because we are still in a pilot. Right now we are at a run rate of approximately, like what I said, you know, at 200 originations a week, it corresponds to something like 90 to 100MW a year. That's the number, at 200 originations run rate a week. You can do your math on how does it compare to the TPO market.

Uh, as a whole.

It's hard to say, and my comments should be taken with a grain of salt because we are still in a pilot.

And right now, we are at a run rate of approximately—like what I said, you know—at 200 originations a week. It corresponds to

Something like 90 to 100 megawatts a year.

so,

That's the number at 200 originations run. Reach a week.

So you you can do your math on. How does it compare to the TP? Okay.

[Analyst] (Citi): Got it. Thank you.

[Analyst]: Got it. Thank you.

Got it. Thank you.

Operator: Again, if you have a question, please press star and then one. Please stand by as we poll for questions. Showing no further questions, this will conclude our question and answer session. I would like to turn the conference back over to Badri Kothandaraman for any closing remarks.

Again, if you have a question, please press star, then 1. Please stand by as we pull for questions.

Showing no further questions. This will conclude our question and answer session. I would like to turn the conference back over to Audrey. Kathan Ramen for any closing remarks.

Badri Kothandaraman: Thank you for joining us today and for your continued support of Enphase. We look forward to speaking with you again next quarter. Bye.

Thank you for joining us today and for your continued support of Wednesdays. We look forward to speaking with you again, next quarter.

Bye.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Q1 2026 Enphase Energy Inc Earnings Call

Request DemoDemo

Enphase Energy

Earnings